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"Multi-Billion-Dollar iPhone Repair Fraud in China" "But as the problem started to have a material impact on Apple's financial sheet, to the tune of billions,

"Multi-Billion-Dollar iPhone Repair Fraud in China" "But as the problem started to have a material impact on Apple's financial sheet, to the tune of billions, the company began to take further action." Multi-billion seems implausible. Really? Apple achieves its financial performance despite absorbing multiple billions of dollars in repair costs? And Apple took no action until billions were lost? I don't doubt this was an expensive scam, but extraordinary claims need to be better substantiated.

imtringued 8y ago
They probably count each repair as a "lost sale". If someone repairs an iPhone for $100 apple sells one less iPhone for $800. In other words on their theoretical balance sheets each repair is a $700 loss of revenue. Of course this is bullshit but that doesn't change the fact that lawmakers let themselves be influenced by it.
FabHK 8y ago
Good point, let's check plausibility: The report notes 2000 cases per week in the Shenzhen store. With 50 weeks per year, 500$ damage per phone, you need 20 store-years to reach a billion. A quick check [1] shows that Apple has 40 stores in China (and that's not counting authorised repair centres), and the problem began 6 years ago. So even assuming the other stores are not as problematic as the Shenzhen ones, the figure could be in the right ballpark. Next, Apple has about USD 250 bn revenue, and 50 bn net income annually [2], so absorbing a billion here and there is not implausible. [1] https://www.apple.com/retail/storelist/ https://www.apple.com/retail/storelist/ [2] https://finance.yahoo.com/quote/AAPL/key-statistics?p=AAPL https://finance.yahoo.com/quote/AAPL/key-statistics?p=AAPL EDIT for clarity.
syshum 8y ago
I am sure they are using "Hollywood" or entertainment industry math to come up with that. Tech Companies are Learning from Hollywood on how to make up damage claims, RIAA started it by claiming every Download off Napster was a "lost sale" so they quickly got to millions and millions of lost sales... Microsoft recently used similar "math" in the Recovery CD case to inflate the damages to send a man to prison for redistributing OEM Restore CD's instead of buying Microsoft's over priced "refurbished PC" license on computers that already had a valid OEM License Companies like Apple are very very very good at inflating their losses especially when it comes to Courts and Taxes

imtringued 8y ago

They probably count each repair as a "lost sale". If someone repairs an iPhone for $100 apple sells one less iPhone for $800. In other words on their theoretical balance sheets each repair is a $700 loss of revenue. Of course this is bullshit but that doesn't change the fact that lawmakers let themselves be influenced by it.

FabHK 8y ago

Good point, let's check plausibility: The report notes 2000 cases per week in the Shenzhen store. With 50 weeks per year, 500$ damage per phone, you need 20 store-years to reach a billion. A quick check [1] shows that Apple has 40 stores in China (and that's not counting authorised repair centres), and the problem began 6 years ago. So even assuming the other stores are not as problematic as the Shenzhen ones, the figure could be in the right ballpark. Next, Apple has about USD 250 bn revenue, and 50 bn net income annually [2], so absorbing a billion here and there is not implausible. [1] https://www.apple.com/retail/storelist/ https://www.apple.com/retail/storelist/ [2] https://finance.yahoo.com/quote/AAPL/key-statistics?p=AAPL https://finance.yahoo.com/quote/AAPL/key-statistics?p=AAPL EDIT for clarity.

syshum 8y ago

I am sure they are using "Hollywood" or entertainment industry math to come up with that. Tech Companies are Learning from Hollywood on how to make up damage claims, RIAA started it by claiming every Download off Napster was a "lost sale" so they quickly got to millions and millions of lost sales... Microsoft recently used similar "math" in the Recovery CD case to inflate the damages to send a man to prison for redistributing OEM Restore CD's instead of buying Microsoft's over priced "refurbished PC" license on computers that already had a valid OEM License Companies like Apple are very very very good at inflating their losses especially when it comes to Courts and Taxes